Senate to Take Up Biological Threats - Firms Could Get Funding Sooner

By Renae Merle, Washington Post Staff Writer

The Senate is moving to take up legislation as soon as this week revamping a struggling multibillion-dollar effort to counter bioterrorism threats with a national stockpile of new vaccines and other drugs.

The legislation creates a central authority within the Health and Human Services Department to manage the effort, sets aside an additional $1 billion for research and gives the federal government the flexibility to provide cash infusions to the small firms doing most of the work.

Supporters of the bill, which is more than a year in the making, are cautiously optimistic that it will pass. Sen. Harry M. Reid (D-Nev.), who is slated to take over as majority leader, listed it among his priorities for Congress's lame-duck session.

"From a policy standpoint, there is nobody shooting at it," said Sen. Richard Burr (R-N.C.), one of the bill's sponsors.

If passed, the legislation would have to be reconciled with the House version, which was passed in September. The initiative is intended to salvage the Bush administration's Project BioShield, a $5.6 billion program to counter biological and radioactive weapons.

The two-year effort has been marked by delays and operational problems. Some companies, for example, have floundered as they conducted research and testing because the bulk of government payments typically do not arrive until firms are ready to produce approved drugs.

Meanwhile, Project BioShield's most significant investment, a nearly $1 billion effort by VaxGen Inc. to develop an anthrax vaccine, is in limbo after the Food and Drug Administration refused to let the company conduct human tests and Health and Human Services threatened to end the company's contract.

Project BioShield "didn't work because a majority of the companies choose not to participate and the ones that did, they were not financed through the valley of death," Burr said.

The new legislation aims to correct those problems, but it still may face some questions. Sen. Patty Murray (D-Wash.), who said she supports the intent of the bill, nonetheless raised safety concerns.

"We need to debate compensating those who may suffer adversely from new vaccines or treatments and expand protections for high risk populations like children, pregnant women, and the elderly," Murray said in a statement.

Under the current proposal, the bill would create the Biomedical Advanced Research and Development Authority to oversee the effort. The bill also attempts to pump more government money into the private market sooner. Under current law, participating companies are not paid until they deliver the drugs, even though Health and Human Services has the authority to give companies a 10 percent prepayment, which would have to be repaid if the company failed to deliver the product. But the agency has never exercised that option.

The legislation would speed up the development cycle by allowing Health and Human Services to pay companies up to 5 percent of the value of their contract when they reach certain milestones, providing them with a welcome cash infusion. The Senate version would also allocate $1 billion over three years for research not funded by a Project BioShield contract or the National Institutes of Health. The House version of the legislation sets aside $160 million per year for two years.

"The federal government is now their venture capital partner," Burr said.

Lance Ignon, VaxGen's vice president for corporate affairs, applauded the notion of the government playing a larger role in sharing the financial risk. Under the current program, "we have all of the financial risk," he said.

The change would not be a "panacea" in VaxGen's case, he said, but could be helpful to the company and the industry in general.

"The success of our nation's bio-defense effort will rest in large measure on the ability to form true partnerships between government and industry based on mutual respect," Ignon said. That includes an "understanding of the almost inevitable setbacks one encounters in drug development."